PAN AFRICAN INSTITUTE FOR DEVELOPMENT

-WEST AFRICA (PAID-WA) BUEA

DEPARTMENT OF BUSINESS AND

MANAGEMENT STUDIES

LECTURE NOTES FOR INTERNATIONAL

BUSINESS MANAGEMENT

PROGRAMME: MBA Strategic Management and Project

Management

COURSE TITLE: INTERNATIONAL BUSINESS MANAGEMENT

COURSE CODE: STMA622

TOTAL CREDITS: 3

BY
NGANG PEREZ
(MAJOR 1)

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 PAN AFRICAN INSTITUTE FOR DEVELOPMENT-
WEST AFRICA (PAID-WA) BUEA

LECTURE NOTES FOR INTERNATIONAL BUSINESS

PROGRAMME: MBA Strategic Management and Project Management

COURSE TITLE: INTERNATIONAL BUSINESS

COURSE CODE: STMA622

TOTAL CREDIT: 3

TOTAL LECTURE HOURS: 15

LECTURER: NGANG Perez (MAJOR 1)

A. COURSE OVERVIEW AND OUTLINE

1. Course Description: This course focuses on the challenges and prospects of engaging in
cross border businesses. Issues like differences in culture, policies, exchange rates and payment
processes; the course also examines the various entry strategies dealing with customs and
immigration, shipment and freights and documentation handling. How to conduct business in a
global marketplace. Dealing with differences in the political and economic milieu, and the effects
of the economic cycles on inflation rates.

2. COURSE OBJECTIVES: By the end of this course, student should be able to:
• Pedagogic Objectives
➢ Understand the complex and dynamic nature of the business environment in today’s
globalized economy in which the external and internal environments are not clearly separated.
• Learning Objectives: By the end of this course, student should be able to:
➢ To analyze different business environments and understand the development of
international business in emerging markets as well as the role of emerging market firms in the
global economy.
➢ To understand what makes a company do business internationally and stand out in
the process.
➢ Understand current issues and trends in international business

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 WEEK 4
SESSION 4/ CHAPTER 4: CULTURE AND INTERNATIONAL BUSINESS

4.0 Brief Introduction: We often underestimate how critical local culture, values, and customs
can be in the business environment. We assume, usually incorrectly, that business is the same
everywhere. However, culture does really matter, especially in business interactions. Culture
refers to the beliefs, values, mind-sets, and practices of a group of people. It includes the
behavior pattern and norms of that group—the rules, the assumptions, the perceptions, and the
logic and reasoning that are specific to a group. Culture is not in-born; rather, it is acquired and
inculcated. Culture can exist at the level of a nation, sub-groups within a nation, or within an
organization.

4.1 PEDAGOGIC OBJECTIVES:

By the end of this session, students should be able to get a full comprehension of the difference
between the general, business and corporate cultures.

4.2 LEARNING OBJECTIVES

By the end of this session, students should be able to understand the significance of culture for
international business, and be able to describe the sociocultural components in international
business.

4.3 DEFINITION OF KEY TERMS/CONCEPTS

(a) Culture: Culture refers to the beliefs, values, mind-sets, and practices of a group of people. It
includes the behavior pattern and norms of that group—the rules, the assumptions, the perceptions,
that are peculiar to a group and traditions that characterize the existence of the human population.

(b) Ethnocentricity: It is the belief in the superiority of one’s own ethnic group.

4.4 CULTURE AND INTERNATIONAL BUSINESS

Human beings draw close to one another by their common nature, but habits and customs keep
them apart. Most anthropologists agree that, culture is learned, the various aspects of culture are
interrelated, culture is shared and culture defines the boundaries of different groups.

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4.4.1 Elements of Culture

Elements of culture are the universal aspects of culture which are performed differently in various
societies and this is what is responsible for cultural diversity across different societies. Such
elements include:

4.4.1.1 Language as an Element of Culture

Language is one of the most conspicuous expressions of culture. It is the medium through which
messages are conveyed. It may be verbal or non-verbal. Understanding the context of a language
is essential to accurately interpret the meaning. Aside from the obvious differences, vocabularies
are actually often built on the cultural experiences of the users. Sometimes the language of the
home country of a company may be the same with that of the host country. Body language is also
an important aspect of language. Generally, people may not understand your words, but they will
certainly interpret your body language according to their accepted norms and this is what will
count when you are trying to do business with them. E.g. rolling your head from side to side is
commonly considered to mean “no” but when the Indians do this, it signifies an understanding or
acknowledgement of a statement (though not necessarily an acceptance).
4.4.1.2 Religion as an Element of Culture

Irrespective of the form, religions often believe in the existence of a higher power and this sets the
ideals of life, the values and attitudes of the followers. The manifestation of these values in an
individual’s life-style largely depends on his beliefs.
4.4.1.3 Education as an Element of Culture

The level of education within a particular culture depends primarily on the literacy rate and the
enrollment in schools. Education has a close relationship with the availability of skilled labor, so
if the level of education within a particular country is high, it will be easier for foreign firms to
operate there given the availability of skilled labor, better training and consequently, more
sophisticated goods and effective services.

4.4.1.4 Attitude and Values as Elements of Culture

Values are beliefs and norms prevalent in a particular society and these largely determine the
attitude and behavior of individuals towards work, status, change, etc. for instance, in societies
where wealth and income are emphasized upon, people work longer hours in order to earn more
while people work shorter hours in societies where leisure is preferred. Moreover, the attitude
towards higher status influence the rate of work given that, those who believe in attaining more

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power and higher status, spend more and are thus, forced to work more in order to meet up with
their expenditures.

4.4.1.5 Customs and Social Institution as Elements of Culture

Customs and manners vary from one society to another. E.g. in the United States, silence is
considered as “negative” while it isn’t so in Japan. Moreover, social institutions are also a
consequence of culture. E.g. in most developed countries, families are smaller than in developing
countries where grandparents and cousins are also considered as family members. E.g. in India,
the joint family system is still prevalent.

4.4.2 The Diversity of Cultures

Cultural values vary from one society to another; for instance, while some societies hold
individualism as a motivator of personal achievement, in others, the concept of the group is more
prominent. Moreover, a manager will be either a risk taker (aggressive in decision taking) or a risk
avoider (conservative in decision taking); engage in long term goals or short term goals, depending
on his culture. It is however important to know why such diversity exists and this process is
referred to as cross-cultural analysis. There are two main thinkers who have carried out studies on
how to better understand cultures; namely, Geert Hofstede and Edward T. Hall.
4.4.2.1 Hofstede’s Study of Cultural Diversity

Geert Hofstede, is sometimes called the father of modern cross-cultural science and thinking. He
developed a framework for understanding the systematic differences between nations from two
data bases he had composed. His main focus was on values, which he defines as broad preferences
for one state of affairs over others, and they are mostly unconscious. Most of us understand that
values are our own culture’s or society’s ideas about what is good, bad, acceptable, or
unacceptable. Hofstede developed a framework for understanding how these values underlie
organizational behavior. Through his database research, he identified five key value dimensions
that analyze and interpret the behaviors, values, and attitudes of a national culture.
a. Power Distance: Power distance refers to how openly a society or culture accepts or does
not accept differences between people, as in hierarchies in the workplace, in politics, and so on.
For example, high power distance cultures openly accept that a boss is “higher” and as such
deserves a more formal respect and authority. Examples of such cultures are found in organizations
in Japan, Mexico, and the Philippines wherein the senior person is almost a father figure and is
automatically given respect and usually loyalty without questions. In countries like Southern
Europe, Latin America, and much of Asia, power is an integral part of the social equation implying
that people tend to accept relationships of servitude. An individual’s status, age, and seniority
command respect, and make it alright for the lower-ranked person to take orders from them. So
generally, subordinates expect to be told what to do and won’t take initiative or speak their minds
unless a manager explicitly asks for their opinion. At the other end of the spectrum are low power

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distance cultures, in which superiors and subordinates are more likely to see each other as equal in
power. This is more common in countries like Austria and Denmark. In fact, in Sweden, for
instance, respect for equality is a warranty of freedom thus subordinates and managers are free to
speak their minds.

b. Individualism/ Collectivism: Individualism refers to people’s tendency to take care of

themselves and their immediate circle of family and friends, perhaps at the expense of the overall
society. In individualistic cultures, what counts most is self-realization; thus, initiating alone,
sweating alone, achieving alone—not necessarily collective efforts, are what win applause. In
individualistic cultures, competition is what fuels success. The United States and Northern
European societies are often labeled as individualistic. In the United States, individualism is valued
and promoted—from its political structure which promotes individual rights and democracy; to
entrepreneurial zeal which tilts towards capitalism. Other examples of high-individualism cultures
include Australia and the United Kingdom.
Collectivism as opposed to individualism simply refers to those societies where group goals take
precedence over individuals’ goals. Basically, individual members render loyalty to the group, and
the group takes care of its individual members. Rather than giving priority to “me,” the “us”
identity predominates.
c. Masculinity/ Femininity: This simply refers to how a society views trait that are
considered masculine or feminine. In masculine-oriented cultures, gender roles are usually crisply
defined. Men tend to be more focused on performance, ambition, and material success. They cut
tough and independent persons, while women cultivate modesty and quality style of life. Cultures
in Japan and Latin American are examples of masculine-oriented cultures. In contrast, feminine
cultures are thought to emphasize “feminine” values: concern for all, an emphasis on the quality
of life, and an emphasis on relationships. In feminine-oriented cultures, both genders swap roles,
with the focus on quality of life, service, and independence. The Scandinavian cultures rank as
feminine cultures, as do cultures in Switzerland and New Zealand while the United States is
actually more moderate in its masculine and feminine classifications.

d. Uncertainty Avoidance (UA): This refers to level of uncertainty a society or culture is

willing to accept. It can also be considered an indication of the risk propensity of people from a
specific culture. People who have high uncertainty avoidance generally prefer to stay clear of
conflict and competition. They tend to appreciate very clear instructions. At the office, sharply
defined rules and rituals are used to get tasks completed. Stability and what is known are preferred
to instability and the unknown. Company cultures in such countries may show a preference for
low-risk decisions, and employees in these companies are less willing to exhibit aggressiveness.
Japan and France are often considered clear examples of such societies. On the other hand, people
in countries with low uncertainty avoidance, are more willing to take on risks, thus companies may
appear less formal and structured, and “thinking outside the box” is valued. Examples of these

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cultures are Denmark, Singapore, Australia, and to a slightly lesser extent, the United States.
Members of these cultures usually require fewer formal rules to interact.

e. Long-term Orientation: This dimension was added by Hofstede after the original four
and it resulted from the effort to understand the differences in thinking between the East and the
West. Certain values are associated with each orientation. The long-term orientation values
persistence, perseverance, thriftiness, and having a sense of shame. These are evident in traditional
Eastern cultures. Based on these values, it’s easy to see why a Japanese CEO is likely to apologize
or take the blame for a faulty product or process. On the other hand, the short-term orientation
values tradition only to the extent of fulfilling social obligations or providing gifts or favors. These
cultures are more likely to be focused on the immediate or short-term impact of an issue. Not
surprisingly, the United Kingdom and the United States rank low on the long-term orientation.
Even though these five values are constantly shifting and not static, they help us begin to
understand how and why people from different cultures may think and act as they do. Hofstede’s
study demonstrates that there are national and regional cultural groupings that affect the behavior
of societies and organizations and that these are persistent over time. Moreover, it’s also important
to remember that cultures don’t necessarily fall neatly into one camp or the other.

4.4.2.2 Hall’s Study of Cultural Diversity

Edward T. Hall was a respected anthropologist who applied his knowledge to the understanding
of cultures and intercultural communications. Hall is best noted for three principal categories that
analyze and interpret how communications and interactions between cultures differ: context,
space, and time.

a. The Context of Hall’s Cultural Diversity

High-Context versus Low-Context Cultures: High and low context refers to how a message is
communicated. High-context cultures are those found in Latin America, Asia, and Africa wherein
the physical context of the message carries a great deal of importance. People tend to be more
indirect and to expect the person they are communicating with to decode the implicit part of their
message. While the person sending the message takes painstaking care in crafting the message, the
person receiving the message is expected to read it within context because the message often lacks
adequate verbal directness. In all, in high-context cultures, body language is as important and
sometimes more important than the actual words spoken.
On the other hand, in low context cultures, such as the United States and most Northern European
countries, people tend to be explicit and direct in their communications. The guiding principle is
to minimize the margins of misunderstanding or doubt. Low-context communication aspires to get
straight to the point. Communication between people from high-context and low-context cultures
can be confusing. This is because, in business interactions, people from low-context cultures tend

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to listen only to the words spoken; they tend not to be cognizant of body language. As a result,
people often miss important clues that could tell them more about the specific issue.
b. The Space of Hall’s Cultural Diversity
Space in this respect refers to everything from how close people stand to one another to how people
might mark their territory or boundaries in the workplace and in other settings. How close depends
from where you are coming. Whether consciously or unconsciously, we all establish a comfort
zone when interacting with others. Standing distances shrink and expand across cultures. For
instance, people in United States prefer a “safe” physical distance meaning, if you stand too close
to someone from the United States, you are apt to make him uncomfortable. On the other hand,
Latins, Spaniards, and Filipinos (whose culture has been influenced by three centuries of Spanish
colonization) stand rather close even in business encounters. In cultures that have a low need for
territory, people not only tend to stand closer together but also are more willing to share their
space—whether it be a workplace, an office, a seat on a train, or even ownership of a business
project.

c. Attitudes towards Time in Hall’s Cultural Diversity

Polychronic vs Monochronic Cultures: Hall identified that time is another important concept
greatly influenced by culture. Polychronic literally means “many times”: In polychronic cultures,
people can do several things at the same time while in monochronic cultures, or “one-time”
cultures, people tend to do one task at a time. People in monochronic cultures, such as Northern
Europe and North America, tend to schedule one event at a time. For them, an appointment that
starts at 8 a.m. is an appointment that starts at 8 a.m. or 8:05 at the latest. People are expected to
arrive on time, whether for a board meeting or a family picnic. Time is a means of imposing order.
Often the meeting has a firm end time as well, and even if the agenda is not finished, it’s not
unusual to end the meeting and finish the agenda at another scheduled meeting. In polychronic
cultures, by contrast, time is nice, but people and relationships matter more. Finishing a task may
also matter more. E.g. in Latin America, or the Middle East, people live under relaxed timetables.
People might attend to three things at once and think nothing of it. Or they may cluster informally,
rather than arrange themselves in a queue.
4.4.3 The Effects of Cultural Diversity on the competitive Advantage of an MNC
If an MNC moves into a country with a similar cultural environment, operational problems hardly
occur unlike if it were to move to a country with a different cultural environment. This causes
serious problems and affects the competitive advantage of the firm which is the root of every
MNC’s success. Cultural diversity impends the competitive advantage of an MNC in several ways
such as by leading to poor communication between the managers and subordinates; buying pattern

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amongst consumers; and the fact that the varying culture limits the scope for advertisements and
sales promotion campaigns.

4.4.4 Managing Cultural Diversity

There are four main steps for managing decision making in different cultural setups.

1. Define the business goal form the home country perspective

2. Define the same goal form the host country perspective
3. Compare the two and note the differences
4. Eliminate the difference and find an optimal solution

4.5 REVIEW QUESTION

(a) Examine the value dimension of culture according Hofstede and explain the extend of its
significance to multinational companies

(b) With the aid of examples, examine the value dimension of Hall;s cultural diversity

(c) Evaluate the effects of cultural diversity on the competitive advantage of a multinational
company.

(d) Write short notes on the following a) Monochronic Culture, b) Polychronic Culture, c)
Elements of Cultures

4.6 REFERENCES

➢ Edward T. Hall, Beyond Culture (New York: Anchor Press/Doubleday, 1976).

➢ Geert Hofstede, Culture’s Consequences (Thousand Oaks, CA: Sage Publications, 1984).
➢ Georges Enderle, ed., International Business Ethics: Challenges and Approaches (Notre
Dame, IN: University of Notre Dame Press, 1999), 1.
➢ Samuel P. Huntington, A Clash of Civilizations (New York: Simon & Schuster, 1996).

4.7 TASKS

➢ Read the notes on unit 4.4.2 The Diversity of Cultures and make a brief summary of not
more than half a page.

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4.8 READING ASSIGNMENT/SUGGESTED READINGS

➢ Soft Copy Text Book: Read Chapter 3, Understanding Cultural Differences from the book
titled the Cultural Intelligence by Stephens Anabaale., 2009. Download link http://
https://www.njsdf.pub-library/culures/00566298v2/documentpdf

4.9 READING ASSIGNMENT SUPPLEMENTARY SOURCE

➢ You Tube Video lecture: Topic: Global Cultures in Business

➢ Video Highlights-It explains the role of culture in understanding international business
➢ Note: To access the video, copy and paste this Playlist
➢ URL: https://youtu.be/p375-btje68
➢ Source: https://www.youtube.com/watch?v=p375-btje68, Retrieved 23 October 2014,

WRITTEN ASSIGNMENT

➢ State and explain the four main steps for managing decision making in different cultural
environment

DISCUSSION ASSIGNMENT

➢ What do you understand by the term cultural diversity?

GRADED QUIZ

1) High power distance cultures openly accept the boss as

(a) A higher and superior authority
(b) Only a figure head
(c) Both ‘A’ and ‘B’
(d) None of the above

2) The following characteristics describe low power distance culture. Outline the exception
(a)Superiors and subordinates are more likely to see each other as equals
(b) The boss is regarded with higher and superior authority
(c) The strength of all the employees is limited only to office work
(d) Employees show less respect for time

3) Long term orientation dimension of culture describes the following characteristics Indicate
the wrong one
(a) Persistence
(b) Thriftiness
(c) Sense of shame
(d) Pride and self esteem

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4) Monochronic culture describes

(a) A high respect for time and appointments

(b) A low respect for time and appointments
(c) An Average respect for time and appointments
(d) None of the above

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